EUR/USD Price Forecast: Remains sticky to 20-day EMA

The Euro (EUR) is down 0.1% at around 1.1610 against the US Dollar (USD) during the European trading session on Tuesday. The major currency pair trades lower as the US Dollar turns positive after a weak start.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher at around 99.00.

Financial markets expect the US Dollar to remain rangebound as a slight improvement in Federal Reserve’s (Fed) interest rate hike expectations, following strong United States (US) Nonfarm Payrolls (NFP) data for August, has limited its downside, while positive commentary from Fed members on inflation has restricted the upside.

Going forward, the release of the US Consumer Price Index (CPI) data for August on Friday is expected to bring a decisive move in the US Dollar.

Meanwhile, the Euro is also expected to remain in a limited range as investors await the European Central Bank’s (ECB) interest rate decision on Thursday.

According to ABN Amro, “the path for the ECB is clear, and a rate hike at Thursday’s Governing Council meeting is fully priced by financial markets”.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1612, holding a neutral near-term bias as it remains close to the 20-period exponential moving average (EMA) at 1.1601. This close alignment between price and the short-term EMA suggests the pair is consolidating its recent gains rather than reversing, while the Relative Strength Index (RSI) at 54 keeps momentum in neutral-to-positive territory, hinting that buyers still retain a slight edge.

On the downside, initial support is seen at the 20-period EMA near 1.1600, where dip-buying interest could emerge if the pair pulls back. The major currency pair could slide to the psychological level of 1.1500 if it fails to hold the 20-day EMA. Looking up, the August high at 1.1710 is the key hurdle for the pair.